Hello, I'm your host, Mr. Chuck, I retired accountant turn truck driver, I reduce my debt in a relatively short period of time, debt reduction to achieve financial freedom takes commitment, confidence, determination. debt reduction is all dead bad, maybe not. Too much debt can be bad. But before I start talking about how to reduce your debt, let's talk about the good things or bad things that is for you. accumulating too much debt such as student loans, credit cards, that that has a high rate of interest can kill you long term and your finances. But there's times where having debt is a requirement and will help you if you're going to be purchasing a large ticket items such as an automobile, or a home, then debt is gonna be your friend. And it can help you acquire those assets. having too much debt where you have a monthly payment for leasing, for example, and you never acquire an asset. That may be some bad debt, getting student loans to get an education is going to help you get a better career that in itself is good debt, but overdoing and borrowing way too much money when you're in school. And using that money to live off is not a good thing to pay for your tuition and books is acceptable, that paying for your living expenses, using student loans may not be the way to go. If you're starting a business, you're gonna have to use some of your own money because a bank won't lend it to you, you got to get started and me showing that you're making some money. And then a business loan may be a good thing, if it's gonna help you expand your business and make your business more profitable down the road. There's always good things and bad things about that it's not all evil. It's not all bad. Having debt is a part of life nowadays. But having too much debt for what you can afford to pay is what is going to get you into trouble. So I'm going to be talking the rest of this episode about how you can reduce your debt, how to go about it, how to set up. And of course using a budget to help you achieve those goals. Get your debt under control, get rid of the high interest debt first. And then as you go along other debt that a lot of questions come up is should you be saving money while you're trying to reduce your debt? There is many people who believe no, you should be trying to pay off your debt first. And then save second, I am in the School of you need to be doing both at the same time. If you're saving for your retirement, the earlier you start, the longer you do it. Over time, the more money you're gonna have when retirement comes along. Whether you're trying to retire early at age 50 or you just figure you're gonna work till you're 60,65 whatever. The early years start saving for retirement, no matter if it's $5 or $10 of pay. You got to be consistent and you got to stay the course your entire life and saving is a habit. Once you get started, you're gonna form a habit of setting aside money into a savings account. Whether it's saving for your retirement or building up an emergency fund. It will become a habit over time. It will be money that you have and won't miss and your day to day living expenses. Your net never will regret doing that. I have never heard anybody say I saved too much money. Maybe if you're 99 years old. And you still got $3 million in the bank, and you have to take it all out and pay taxes on it. Okay, well, maybe you saved too much money. But I've never heard anybody complain about it. having to pay taxes is a good problem and my book, you never can have enough. You never know what lies in your future, and what's gonna happen. So by starting early, and doing a savings plan is important, is almost more important than paying off in reducing your debt. Remember, that that came along is something that you did one happen in your life to cause you to get behind on paying those credit cards, maybe you just never made enough money, maybe you living expenses were more than what you could afford to pay. Maybe you were unemployed for a while. So saving and debt reduction go hand in hand, you should be doing both at the same time. If you have a job and you got a 401k, you should be contributing money to their 401 k no matter what. And if your employer is matching, you need to put in enough to get the maximum match from your employer. So you need to contact human resources, the Find out how much you should be putting in a 401k. And then, at home, you should be building up an emergency fund if you don't have one. And you can never have enough money and an emergency fund to pay whatever might happen. Just recently, I had plumbing problems. And it was expensive. It was almost$10,000. But I had the money set aside. And my high yield savings account. I hate the taken out of there. But I had it and I paid for it. And I did not have to go into debt to pay off there that emergency plumbing problem that I had. So look forward and keep track of your money. And a budget will help you greatly. For those of you who know how to use a spreadsheet, or have a spreadsheet on your computer or even have a computer, I've created a budget spreadsheet that can help you track your budget versus your actual and then even tells you how much money you can set aside into savings account and not have to worry too much about being overdrawn. I don't guarantee it would work for everybody. But he can give it a try. And I'll send you the file. If you send me your email address. And I will through Facebook, he go to my Facebook page, reduce that increased wealth. Send me an instant message through Instant Messenger, your email address and say I want that spreadsheet and I will email it to you No problem. Next up, we're gonna be talking about how to reduce your debt. And we're gonna mostly concentrate on reducing credit card debt. credit card debt, it's a whole new back, do you feel like you're working for somebody else and not making any headway? If that's the case, then you obviously have too much debt. And we're gonna focus on the debt you should be getting rid of First, the high interest debt, which is typically credit cards, and maybe some of your student loans. Your student loan debt may not be a high rate of interest, but there might be a high balance item. So your payments are somewhat out of control. Or maybe you have more than one student loan debt. And you feel like you You go to work, you work all week. year you're struggling, you're barely making the payments on things. You're living a pretty frugal life. So you think and you're not getting anywhere you have no savings account. You feel like you're just working for somebody else. That's what I felt like when I was in this situation. So what do you need to do to get started? This is nothing new. You can do Go to YouTube and watch a dozen videos on exactly the same thing. I'm just telling you, this is what I did. And it worked for me, I figured it out all by myself, I did not watch any YouTube videos to learn or to come up with this method. I did some reading. But I was also an accountant. Just because I was an accountant didn't mean I knew how to get out of debt, it just meant I know how to keep track of it. That's what accountants do. So step one, quit creating new debt, quit borrowing money, whether you're borrowing money by using a credit card, or you're borrowing money by going to a payday loan, or you borrow money by going to bank and trying to get a loan. If you come up short, and these loans are costing you anything over 15%, you're gonna be considered high risk. And the higher risks you're consider, the more the interest rate is gonna be, and not only for loans that you're trying to take out, but it's going to cost you more for your insurance. Whether you're trying to get insurance for your automobile, or renter's insurance or home insurance, you got to be paying more because they're going to consider you a higher risk, because they're looking at all your debt. And they're thinking, Hmm, maybe he can't afford to pay us. So we need to charging extra, so that when he makes those late payments and has a claim, we will have some extra money to help pay those claims. What they're thinking is, I don't know for sure, but it's probably something along that line, everything's gonna cost you more. So quit creating new debt, I don't care what it is just quit doing it. This step two, is make the minimum payment on all your debt. Do not pay anything extra for now. I know that sounds like well, how am I gonna get out of debt, if I don't make any extra payments, because the minimum payment is just gonna cover the interest. And a little bit against your principal, as required by law or required by your state. There is laws that require the credit card companies to apply each minimum payment sum to the principal balance. I know it sounds like I'm crazy. And you got to make these payments on time, every month no matter what. Because your credit score is probably hurting, you need to start working on improving your credit score, you need to get rid of this high interest debt. That is what is holding you back. It's enslaving you. Earlier in this episode, I talk about good debt, maybe a mortgage on your home, maybe a loan for your automobile. There is debt we can't afford. Avoid. That's going to be needed throughout our lives. But if we can control it, we can get the best interest rate possible later on. And now we're focusing on this credit card debt, or maybe credit card debt and some student loans. So you quit creating new debt, quit borrowing money, make the minimum payment on all your debt. And number three, set up a savings account because you need an emergency fund. If you don't have the cash, or the money available to pay for something, when you have an emergency, even if you just have a flat tire on your car, if you have to use a credit card to pay for it. You're not making any progress. Set up an emergency fund and fund it. So we're gonna focus on doing those three things first, as optional. Nobody ever talks about your income. If you can change jobs and get a higher rate of pay, and that's what I did. I was a truck driver. So it was fair. Really easy. truck drivers are in demand. So I want from a job that I thought was okay, payment to a job that was double the income and it was a whole lot less work. So I got myself overall a better job for more money and less work, who can complain about that. And that helps speed up my progress on my debt. If you're in an industry where it's hard to change jobs, or maybe there's no demand, then you need to look at maybe a part time job, or doing something to create more income. And that is totally up to you. And it's optional. But that's something you should be doing ongoing throughout your entire life or career, you should always be looking for better opportunity to make more money. Now back to your debt problem. And that definitely will help you with your debt problem. Once you have an emergency fund set up, you need to fund it for a minimum of $500, I would recommend you get at least $1,000 in there, but let's shoot low, so you can hit a target. And once you get the$500 in there you keep putting money in. And then we got to figure out which debt do we pay off. First, there's two methods. There's a snowball method. The snowball method is you pay off the lowest balance first to the highest balance. That way, when you pay off a credit card, you felt like you accomplish a goal, and you're gonna be more likely to stay on track. To keep up this plan, you need to have a plan and this is what I'm telling you now. The second method is the avalanche method. And that's where you pay down the highest interest rate first, work your way down through that order. If you use the avalanche method, you're gonna pay less in interest. And the less interest that you pay over time, the faster the principal is gonna be reduced as simple, basic math. Whichever works for you go for it. If you can stay with a plan, and you can stay focus, the avalanche method will probably be best for you. If you tend to get distracted, or you can't stick to a plan, then the snowball method will help you accomplish some goals quickly, you can see progress being made. So that may be the best method for you. What I did was a combination of both, I use the snowball method, I paid off the lowest balanced credit card first. So I had a credit card with a zero balance, then as soon as I had that done, I start paying towards the highest interest rate first, and I kept doing it that way. Then just a note, do not close your credit card account, do not cancel that credit card when you get it paid off. Because the longer you have that credit card on your credit history, the credit better your credit score is gonna be and the higher credit available, you have the borrow and the less credit that you're using, the higher your credit score is gonna be. So if you have $10,000 with a credit available in your own use in less than $1,000 and the month, the month, you're gonna have a very good credit score, assuming you're making all your other payments on time. Other payments being your credit cards, your loans, and your utilities and your credit score should start improving. So now we have a plan. You got to stick to it. If you are able to work a second job, do that and you can start applying that money to your credit card debt. don't over do anything. We're not talking About all your finances here. But the big picture would be you have set up yourself a budget. I've talked about budget, too, I'm blue in the face. But a budget is important. You got to know how much money you have coming in, you got to know how much money is going out. And we look at your budget, is there anything there that you not no longer are using? Is there anything there you can do without? Is there anything there, you can reduce the cost of what you're paying. Perhaps you have cable TV, but you're never home to watch it. Because you're always working? Well, perhaps you need to cancel cable TV. And then if you are home and you do watch TV, get rid of that high cost cable TV, if you're paying for Internet service, use your internet service to the maximum stream your TV, people have been doing this. Now for years, I've been doing it for two or three years, and I saved a ton of money. Cable TV is a ripoff, you can get the same thing through a streaming service that you getting for cable TV, and it's gonna cost you a whole lot less. If you can't say 50 to $80 a month by streaming, you're using the wrong streaming services and keep your streaming services at a minimum no more than two. I'll be back in one moment with my final thoughts. If you listen to this podcast, reduce that increased wealth on an Apple device. Scroll through all the episodes towards the bottom. And you can select write a review and leave your comments. And you can rate this podcast, I appreciate all feedback. And I thank you for your time and doing so. Getting yourself out of debt doesn't have to be overwhelming. Perhaps you need the services of a debt Counseling Service. But remember, they're going to charge you a fee. Perhaps you think bankruptcy may be the way to go. But unless you set up a budget, and you know what your dad is, and you try to prove that you're unable to make those payments, or you're unable to pay it off for whatever the reason, bankruptcy is not going to work and you're gone to have to pay for an attorney, which the attorneys last on my check charge a lot of money. Your debt reduction plan, you just need to create it. stick to it. Be vigilant, try to save as much money as possible by using a budget, identify what you're paying for, what your income in, and expenses out are on a month to month basis. And you got to track that on a regular basis. That's why I talk so much about a budget. It's important, you're not going to be able to pay off your debt, you're not going to be able to build up your emergency fund. If you don't know how much money is coming in, and how much money is going out. If you're just looking to get your debt under control, you need to make a list of all your debt, credit cards, student loans, payday loans, personal loans, auto loans mortgage and put them in order by the interest rate, the highest interest rate first. So what you need to know is the name when the payment is due every month, what when it's due, how much you owe and the interest rate. If you put all that information online and put it in order by highest interest rate to the lowest interest rate, he should find that most of your credit cards are on a top maybe some personal loans are underneath that. Maybe your auto loans are right below that. May in your mortgage should be the lowest your line of credit should be before your mortgage and then your first mortgage. If you got payday loans, quit using them that they're ripping you off. You're paying way more, a two or three day loan to get paid, and you're paying 30 or 40% rate of interest. And if you use in your overdraft protection to keep from bouncing checks, your bank is ripping you off, they're charging you a high rate of interest for two or three days, for that short term loan to cover that check. And then your payment, your payroll comes in, and you forget to pay the bank, you got to pay that overdraft, it doesn't happen automatically, and they're gonna charge you a high rate of interest. So if you use an overdraft protection, make sure that when you get paid that you pay that off, first, pay off all your payday loans, I quit using them. Set up a savings account, to set up a savings account, you probably need a minimum of $50. And once you set it up, most banks are online now you can go in every pay and transfer some money and to your savings account and build up that emergency fund, your first goal should be $500, then once you hit that, then it should be$1,000. But what I didn't explain earlier, is you're gonna use your emergency fund, pay and off your credit together. So you're making a minimum payment on all your credit cards and all your debt. You're putting money into your emergency fund. This is like a domino effect. And slow motion is gonna be a slow start, you're not gonna look like you're making any progress. But as time goes on, is gonna go faster and faster, and you're gonna be making progress really quickly. So you're putting money in your emergency fund, you hit the$500, you keep putting money in there, and you're still making the minimum payment on all your credit cards. Once you get that bill up to $1,500 or $2,000, th t you have a all that time you' e building it up, you're getting a larger and larger emergen y fun Once you hit $2,000, you have$1,500, you can apply to your ebt. If you're doing the snowball method, you apply it to the lowest balance first. If you can pay off that card and still have some x leftover, then the access applied to your next lowest balance. If you do it like me, I paid off my lowest balance first. And then I started applying that money to my highest interest item second. Then you start all over, you build up your savings account again until you get another$2,000. And then you take th t $1,500 and you apply it t whichever method you're usin snowball lowest balance firs avalanche highest interes first. And you keep doing tha over and over. Within the firs year you should start leaving $1,000 in that savings account. So now you have $1,000 emergency fund, you're building your myrt your savings to 3000. So you have a period of time there where you have at least 1000 and you're slowly building up your savings account. So maybe then you have 1,500 then you have 2,000 then y u have ,2500 then you have 3,00 if you don't have any big expe ses coming up where you might run short of money, then use hat 2,000 and apply it to your And you keep doing that over and over. That way the big mount of money that you're applying towards your debt is gonna be like you're making a big payment, you're making big progress all at once. And in the meantime, until you have the money, you have an emergency fund. If you get a flat tire, you have the money to pay for it. Or if your hot water heater goes out. You may have enough money to pay for it. So you have a car The goal of quit creating knew that you do that month in and month out. I personally paid off$132,000 in debt, and three years, eight months. I know that because I took kept track of it. I know that because I have a budget. When you get your debt completely paid off, like I have, I paid off all my credit cards, I paid off car loans, I paid off line of credit on my mortgage, my I forget what they call your line of credit, where my house is collateral, and I paid off my mortgage, I'm now debt free. I have achieved financial freedom. But in order to achieve financial freedom takes commitment, confidence, determination. That's what you have to do to get rid of all your debt. I'll say that again. debt reduction, to achieve financial freedom takes commitment, confidence, determination. You got to be committed to your plan. You have to have the confidence that your plan is gonna work and you have to have the determination to make it work. You can do it and you can do it all by yourself. Get started today. list down all your debt, bare minimum least know how much debt you owe, and you'll be much better off for it.